We are getting ready for next week’s MPC “Super-Thursday”. After the weak GDP result released on Friday, this week our focus will be mainly on PMI data.
PMI, so…was it all about the snow?
The first three days of May will give us a really important indication about whether or not the q1 GDP growth slowdown was just about the bad weather experienced between the end of February and the beginning of March. These will also be the last major releases before the MPC decision which is now more uncertain than ever.
The first appointment will be on May 1st with manufacturing PMI. While almost everyone else in Europe will celebrate Labour Day, we will be concentrating to see if manufacturing will bounce back in the April reading. The last few readings showed that the expansion is not over with readings way above the 50 threshold, but weaker than those at the end of 2017. Manufacturing PMI hasn’t seen any sign of contraction since the aftermath of the EU referendum in July 2016.
The next day it will be the turn of construction PMI. The beleaguered sector was the main drag to expansion in the first three months of the year with a registered quarterly contraction of 3.3%. The sector is clearly the most exposed to bad weather and the collapse of Carillon in January surely did not help. The last reading was way under 50 (47.0) and was the weakest performance since July 2016.
Last but not least, service PMI will be on the scene on Thursday. Retail sales were hit badly by weather in the first quarter of the year and the sector expanded by just 0.3%, half the average result this sector experienced in the last five years. The last PMI reading was at 51.7, down from 54.5 in February and the weakest performance since, guess what, July 2016.